Good day, ladies and gentlemen and welcome to the Oxford Industries, Inc. Second Quarter 2016 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the floor over to Ms. Anne Shoemaker for opening remarks and introductions.

Thank you, Don and good afternoon everyone. Before we begin, I would like to remind participants that certain statements made on today’s call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guarantees and actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC, including the risk factors contained in our fiscal 2015 Form 10-K. We undertake no duty to update any forward-looking statements. During this call, we will be discussing certain non-GAAP financial measures. You can find a reconciliation of GAAP financial measures to certain non-GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website, at oxfordinc.com. Please note that all financial results and outlook information discussed on this call, unless otherwise noted, are from continuing operation, and all per share amounts are on a diluted basis. As a reminder, the results from the Ben Sherman business are reflected as discontinued operations for all periods presented. Also, on April 19, 2016, the company acquired Southern Tide, which is presented as a separate operating group. And now, I would like to introduce today’s call participants. With me today are Tom Chubb, Chairman and CEO and Scott Grassmyer, CFO. Thank you for your attention. And now I’d like to turn the call over to Tom Chubb.

Good afternoon and thank you for joining us. Our consolidated results for the second quarter were very good with a meaningful sales increase of 13% and earnings above the top end of our forecast. In a retail environment that is still not particularly strong, we are proud to have achieved these results with strong contributions from each of our lifestyle brands. I will start with Tommy Bahama. We had a solid performance from Tommy Bahama with an 11% increase in sales over last year and 7% comp store sales growth. While the Tommy Bahama second quarter results were strong, we are not immune to some of the macro challenges such as reduced mall traffic and lower spent by international tourists in key resort destinations. The Tommy Bahama team has taken specific actions to address the current retail environment. First, our Tommy’s operating disciplines. At Tommy Bahama, inventory levels decreased 3% year-over-year as the team focused on more integrated inventory management between its retail, e-commerce and the wholesale businesses while maintaining a level of the inventory adequate to support growth. In the current environment, we think this is a commendable achievement and demonstrates that Tommy Bahama is not only a great brand, but also a business that can execute. Second, Tommy Bahama continues to engage our customers in a multifaceted way through direct mail, e-mail and our beautiful stores and restaurants. This quarter, several successful marketing events drove meaningful business. Our Friends and Family event, flipside awards, loyalty cards and other promotional events held throughout the year have worked well. While none of these are new events, the timing of the loyalty gift card shifted from the first quarter of last year to the second quarter of 2016. The success of these events demonstrates our ability to activate our very loyal…

Thanks, Tom. Please refer to our press release issued earlier today for complete results for the second quarter of 2016. I will now walk you through a selection of highlights from the second quarter as well as our guidance for the third quarter and full fiscal 2016. In the second quarter, consolidated net sales increased 13% to $283 million compared to $251 million in the second quarter of 2015. As Tom mentioned, Tommy Bahama saw an 11% increase in sales with a comp sales increase of 7% for the quarter. Lilly Pulitzer was up against a very strong quarter last year, but delivered an impressive 8% top line increase and Southern Tide contributed $9 million of sales in the quarter. On a consolidated basis, gross margin in the second quarter was lower than the second quarter of 2015 primarily due to Tommy Bahama and Lanier Apparel. At Tommy Bahama, we stayed focused on keeping inventory levels in check and offered deeper discounts, primarily in footwear and women’s apparel, in our off-price channels of distribution. As Tom mentioned, we discussed in detail in June, we also shifted a key loyalty gift card program at Tommy Bahama into the second quarter. This gave us a sales lift, but also as expected, impacted gross margins in Q2. Finally, our Lanier Apparel group’s inventory markdowns were higher year-over-year. SG&A increased primarily due to incremental costs associated with operating additional retail stores and restaurants, as well as SG&A associated with our newly acquired Southern Tide business. In the second quarter, our consolidated operating income increased 11% to $39 million. Earnings per share were $1.44 compared to $1.27 per share in the same period of the prior year. And adjusted EPS was $1.48 compared to $1.32 in the second quarter of 2015. Now, to the balance…

Thank you. [Operator Instructions] And we will take our first question from Ed Yruma with KeyBanc Capital Markets.

Hi, good afternoon. Thanks for asking my question. I guess, first on Tommy Bahama comp obviously impressive performance, would the business have comped positively if you didn’t have that gift card promotion? And then, I guess second, you have kept your adjusted guidance consistent, have you baked in a more conservative assumption around wholesale, which I know you called out during the call? Thank you.

Ed, with respect to your first question, I am not quite sure how to answer it, because the loyalty gift card event is a huge part of the second quarter. And if you take it away, there is no way we are going to comp positively. Scott, I don’t know if you...

Yes, it certainly had an influence on the 7% comp. It’s really hard to tell without it if we would have comped positively since last year, was in the first – primarily in the first quarter. Business did certainly pickup. And I think business would have certainly picked up without that, but whether we have been positive comp or negative comp, it’s really hard to dissect, but certainly, we wouldn’t have been at a comp as high as 7% without the event.

And on the wholesale piece?

I am sorry will you repeat the question on the wholesale piece? I didn’t follow you...

Sure. You maintained your guidance for the year on an adjusted basis. You had some cautious commentary on the wholesale. I guess have you incorporated that view into your guidance considering that you did bake for the second quarter? Thank you.

Thank you, Ed. And yes, 100%, the reason that we are maintaining guidance instead of raising guidance is really because our view on the wholesale for the back half of the year is lower than it would have been a quarter ago. So, the whole erosion, if you will, is in the wholesale business. And it has really nothing to do with the way that we are performing in those accounts and has everything to do with the way that they are approaching the market and their inventory planning. And it’s like we have said, we think it’s probably a pretty smart move for them and hopefully a healthy thing for the industry, but we can’t escape the fact that we are feeling some impact from it right now.

Great. Thanks so much.

Okay. Thanks, Ed.

We will take our next question from Pam Quintiliano with SunTrust.

Thanks so much for taking my question guys and congratulations on such great execution and a really challenging environment.

Thank you.

So, I have a few for you. Starting with Tommy, you mentioned, Scott, in that gross margin commentary performance in women’s and shoes. Could we just go a little bit deeper about what was going on there, specifically as it relates to the women’s business, given the re-launch that just happened not too long ago and just how we should be thinking about that? And then, also related to Tommy, Hawaii and Waikiki and how that was doing as well as Japan?

Okay. So, let me start and then I am going to flip it over to Scott. And so I will go in reverse order. In our Asia business, I mean, the bottom line is that we are performing according to plan. I think we are actually a bit ahead of our plan for the year. So, as you know, the goal was to reduce some of the infrastructure cost, reduce the operating loss over there, grow the businesses, focus on Japan and Australia, and look for opportunities where we could perhaps to go with the distributorship model in certain markets. And what I will tell you is that we are tracking according to plan. Japan is actually comping really nicely. And our losses there are reducing. Australia continues to grow and be a small, but a nice market for us. And overall, I think we are going to achieve our goals of loss reduction for the year there. With regard to Waikiki and Hawaii, as you have heard from us, we referred to it a bit in our prepared comments when we talk about international tourists and we talked about it on the first quarter call and probably at some other points that we have spoken with you. But Hawaii has been a challenging market for us for the last year or so. The international tourists are spending a lot less money there. We think a lot of that has to do with exchange rates. But overall, it’s been a challenging market. Within that context though, we are very pleased with the way that the Waikiki location has ramped up. They have been in business since late last calendar year and this summer in particular they have trended very nicely. And we believe that’s going to be a very successful location for us both as a profitable store, but also as a good brand builder, particularly with regard to a lot of international tourists. And now on the women’s inventory question, I am going to flip that over to Scott and let him give you a little more detail on that.

Yes, Pam, we were – we had some excess women’s and excess footwear inventory that we needed to clear. We did a special flash sale during the quarter of just women’s and footwear centric. There was no men’s in that flash sale back in the second quarter. We also got more promotion on our – in our outlet stores to move those categories. Lot of that was – the women’s was pre-spring, maybe a little bit of early spring, but most of it was pre-spring. And it’s just – we just needed to keep pace and keep our inventories clean. And as we mentioned here, our inventories at Tommy are down, even though we have 7 new additional stores and have growth planned. So, we are really pleased with the fact that they are focused on the inventory reduction, but it did eat into the margin a little bit this quarter. And we did comp up nicely at Tommy and that was in men’s and women’s in the second quarter. So, we are pleased to see that.

So, just to follow-up on women’s, I think that was very helpful. The newer women’s product, is that resonating with the tweaks that you have been making or are you pleased with the progress there given the challenging environment we are in?

Yes, keep in mind, Pam, it takes us more than a year to really make any adjustments between when you sell – see retail selling on the floor and when you get to anniversary that and put those learnings into use. That said we were pleased with what we saw in the second quarter. Women’s sort of pulled its weight and contributed positively to that comp that we had. So, it had a year-over-year increase in comp stores in e-comm, which was good to see. Overall, as you know, in the first quarter, it was a little more hit and miss. And overall, I think what we have learned in the first half of the year is that we continue to be very strong in women’s swim and in dresses, which have always been strong categories for Tommy in women’s. And we have learned an awful lot in regards to sportswear that we will incorporate into next spring, so a good solid second quarter. And for the total first half, I think we have learned a lot that will help us next year.

Great. And then just one last follow-up on or I should say question on Southern Tide, because you guys have historically done such a great job scaling your new acquisitions. So, how many points of distribution are there currently with Southern Tide? And just how are you approaching it? I know personally out in the New York area, I am seeing a lot more people wearing it now, but it’s still very subtle. So, yes just any thoughts on how you are scaling that business. I understand it’s very early stages. So I guess just thinking the next time...

Yes, it’s very early stages. And to be very direct about it, our initial focus – this brand was much earlier stage than other acquisitions we have made. And as we outlined in our first quarter call, we thought there was a much better, greater opportunity here than say when we bought Tommy Bahama to really help them by providing a lot of infrastructure and back-office type functionality, fulfillment through an existing distribution center we have and things like production and sourcing product development. So, we have been very focused on bringing them on to our platform in the first couple of months and that’s going extremely well. We think that sets them up well for growth. As you know, currently, their business is about 80% wholesale and that’s primarily specialty stores. And I think they are in about 700 doors or so specialty store doors. And then they have a very small department store business with two of the better department stores there. And in total, that would be probably 5% of their business or something like that, so growth opportunities going forward. We definitely think e-comm is one. Wholesale is an opportunity. They have just got me into doing a couple of licensed stores similar to the Lilly Pulitzer licensed stores. And then a couple of years out, we anticipate that they will open company owned stores as well.

Alright. Thanks so much for all the detail and congratulations again.

Okay. Thanks Pam.

We will take our next question from Jeff Van Sinderen with B. Riley.

Good afternoon. Let me add my congratulations on the improvement in Q2.

Thank you.

Maybe you can just touch a little bit on how we should think about gross margin in Q3, I know it is your smallest quarter of the year, but just anything we should be considering for gross margin?

Yes. You do have the Lilly flash sale during Q3. So that tends to pull down gross margins. And also it’s a very weak direct quarter. We should – Lanier, who has lower gross margins, actually will have third quarter will be a decent quarter for them. And then we show fourth quarter being a little more challenging for them. All that will weigh margins down year-over-year, probably a couple of hundred basis points year-over-year with the bigger flash sale and Lanier being a little bigger piece of the pie weighing into that.

Okay. And then your Lilly comps in Q2 were considerably better than I think – certainly better than what we expected, so I am just wondering how we should think about the Lilly business for Q3. And then maybe you can also just kind of touch on, I guess the progression of business that you saw in Q2 at Lilly and maybe speak to the comparisons at Lilly, I know they get easier in second half?

Yes. There is no question about it in the – at the back half of the first quarter and early in the second quarter. We really felt the year-to-year difference with the Target collaboration that happened on April 19 of last year. So in May, we comp down in the upper teens. And then in June and July, we sort of roared back and had very strong comps to finish the quarter at a minus 1 comp in Lilly, which we thought stacked up against a plus 41 last year and I think a plus 19 a year...

2 years, both years before that.

Yes. Both years before that, so plus 19, plus 19, plus 41. And then to be at minus 1 this year with a very strong June and July, we just couldn’t be a whole lot happier with that result. So hopefully, that helps. I think that to be fair, I think even this time last year we were still getting some kick from the whole Target collaboration. But we have shown, I think in the back half of the second quarter that we can more than overcome that. And so in terms of comp assumptions for Q3 and Q4, I will let Scott...

We had strong comps last year on both quarters, but we still think we can comp positive, and we think it will be a more modest rate as we are going against strong comps. But we would expect Lilly to comp positive in Q3 and Q4, but again more modestly.

Okay, great, that’s helpful. And then maybe you can just touch just one more if I can throw it in there, just on inventory, obviously in wholesale, I mean we are hearing this everywhere that some of the major retailers, as I think you pointed to, they are ordering less upfront and they are chasing more at season. And I am just wondering how that is impacting your planning for second half inventory, how much you are keeping sort of on hand, I guess to chase that sort of thing?

Well, we generally try to avoid being in that business of having a lot on hand to support chase. There are some areas and some specific pockets of business where we do that. But for example, in Tommy Bahama, that has – that’s part of why their inventories year-to-year are lower is that the orders came in a little light and we are trying to keep our inventories a little bit light as well.

Okay, that’s helpful. Thanks very much.

But to reiterate what Scott said a minute ago, we feel really good about where our inventories are. And we think Tommy in particular has done a terrific job. And with the flash sale at Lilly, which is a Q3 event, they came out of Q2 a little bit heavier than last year, because last year they did a warehouse sale in Q2 and then the flash sale in Q3. This year, we did away with the warehouse sale, which I think was about $4 million last year. So Lilly’s – we are in really good shape on inventories.

Okay, good to hear. Thanks very much and best of luck for the rest of the quarter.

Okay. Thanks a lot, Jeff.

We will take our next question from Eric Beder with Wunderlich Securities.

Yes. Good afternoon. This is Bryan Caronia on for Eric. Thank you for taking the question and I would also like to offer our congratulations for great results. So the first question we had, circling back to Lilly Pulitzer, which obviously had a once again very successful quarter, but we were interested in if you could give your thoughts on the expansion efforts or the cadence or expectations for expanding Lilly Pulitzer away from the core East Coast region, specifically how has the stores and business been doing in more of your most westernmost markets, whether that’s in Texas or the Midwest, any sort of commentary on sort of how we look at Lilly going forward would be great?

Yes. That’s a great question and very timely. We just opened a new store in the NorthPark Mall in Dallas about 10 days ago and that’s sort of the A+ mall in the Dallas market. It’s off to a great start. We are very excited about it. We think it’s going to be a very successful store and we had our Lilly Pulitzer CEO and key members of the retail team been out in Texas this week. And it’s never been a huge market for us. We have had a couple of stores out there. But we really believe that we can build that. And then we opened the store in Chicago, I guess that was a year ago now. And we have been really pleased with the way that, that one has worked. So as we build into these markets, we want to be careful and make sure we are building very carefully in supporting these stores well with marketing and other supported markets, where we are not as well known. But we believe that we can be successful and we will continue to build into those markets.

Great. And if I could just circle back to the maintenance of guidance for the full year, obviously you had said there has been – certainly, this is something we have been hearing from many of your peers in the space that the majority of the wholesale driven retail customers have been paring back their initial shipments or orders of inventory buildup and having a higher cadence of replenishment inventory in the back half of the year, could you perhaps in term of obviously with – or you may have seen the third quarter guidance being a bit higher than what us and most of the market has been expecting in terms of bridging data, distinction between seemingly perhaps a little bit lighter than what many may have been expecting in the fourth quarter and what we have seen in terms of the cadence of department stores and wholesale retailers driving their cadence of inventory build?

Yes. It’s really wholesale driven. The fourth quarter maybe not being as – having quite the year-over-year growth that some would expect. As mentioned earlier Lanier, we are expecting a fairly weak fourth quarter. Third quarter, we are expecting to hold okay. But fourth quarter, we are seeing a little lower order patterns. And we are just seeing holiday bookings, people booking more conservatively. Sure though, hopefully there will be some chasing going on. Hopefully, there will be an opportunity to capture some of it. But as Tom mentioned, we are not going to have a ton of inventory to support a ton of that. But it is wholesale driven. It is – maybe the lightness you might feel in the fourth quarter is wholesale driven.

Okay, great. Once again, congratulations on a great result and best of luck for the rest of the year.

Thank you.

Thank you.

[Operator Instructions] We will go now to our next question with Rick Patel with CLSA (sic) (Stephens).

Good afternoon, everyone and thanks for taking my question and I will add my congrats as well.

Thanks, Rick.

Just a question on your promotional cadence for Tommy, so did your loyalty gift card event have the same duration and level of discount this year as it did last year and given how successful it was in terms of driving the comp, how should we think about the back half in terms of promotional events compared to last year? We are curious if there is anything new or incremental to highlight in order to drive traffic.

On the loyalty gift card event, I mean, we are very pleased with the way it works. I think it was maybe a few more cards than last year, but roughly comparable to last year. And we just – it worked extremely well as did the other two second quarter events. We actually had an additional event last year. The Polo’ha Polo promotion that you may remember, that we actually dropped this year. So, on a combined first and second quarter basis, we actually had one less event, not one more or not the same amount.

And actually, the event sales themselves, we actually drove a little bit higher gross margin year-over-year, but we had a bit more concentrated volume within the event. So the event, people responded more to the event, but we were able to drive a little higher gross margin in the event. We went with a $175 hurdle on the flipside, which worked well and we tend to get a little higher average ticket during that event.

And can you also talk about the outlook for your Tommy outlet stores? Clearly, it’s been a challenged area of the industry. So, I am curious if you can provide some color there and any signs of a rebound in tourism in that channel?

In outlet stores, that world is changing a bit and I think it does everything to do with the amount of off-price that’s available all over the place. So, as you will have noticed, we haven’t opened an outlet store in a while and we are really revamping the way that we merchandise those stores. We have tested it in a couple of markets and have been very pleased with what we have seen so far and anticipate that we will probably do that more broadly within our 30 some odd outlet stores that we have at this point.

And as you know, there is a number of aspirational luxury brands out there that are deemphasizing the wholesale channel pulling back on inventories across various categories. So, despite the near-term challenges that department stores pose this year in terms of less upfront buys, do you see the vacating of these other brands as a growth opportunity for either Tommy or Lilly as you think about 2017?

I think not so much for Lilly, but because of their strategy, which is really not – they are not into the department stores much at all. In Tommy Bahama, I do think it possibly creates some opportunity to do some more business.

Thanks very much and all the best in the back half.

Thank you.

That concludes today’s question-and-answer session. At this time, I will return the conference back to Mr. Tom Chubb for any additional remarks.

Thank you again for your time this afternoon. We very much appreciate your interest and look forward to speaking to you again next quarter.

This does conclude today’s conference. Thank you for your participation. You may now disconnect.